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AG Cooper forces fracking company to obey state law

Release date: 8/11/2014

Know your rights about fracking and watch for illegal lease offers

Raleigh: Improper solicitations of fracking leases will stop as an out-of-state firm warned by Attorney General Roy Cooper’s office moves to properly register and stop soliciting landowners to sign illegal deals, Cooper said Monday.

As North Carolina moves forward with fracking to extract oil and gas, landowners need to learn about their rights and protections under the law, he urged.

“We fought for strong protections for property owners and it’s important that you know your rights when it comes to oil and gas leases,” Cooper said.  “If someone knocks on your door and tries to push you into signing a lease that doesn’t include the protections you deserve, let my office know.”

Cooper’s Consumer Protection Division is currently investigating one company that pushed potentially illegal fracking leases on landowners in Durham County. The company, Crimson Holdings of Pennsylvania, proposed paying landowners $5 per acre to explore for oil and gas on their land.

The Attorney General’s Office wrote to Crimson Holdings July 28 demanding that it cease offering or entering into oil and gas leases in North Carolina until it can prove that it is complying with state laws. The letter pointed out several problems that could potentially violate state law, including that the company isn’t registered to do business in North Carolina and that its leases appear to last for more than 10 years, fail to give consumers the right to cancel, don’t seek approval of the property owners’ mortgage lender, and lack educational information required by law.

Crimson Holdings responded that it will change its leases to comply with North Carolina law. According to the company, it sent leases to more than 1,500 North Carolina property holders, though it was unclear Monday if any had been signed and returned.

Cooper offered some tips for consumers considering leasing their land for oil or gas exploration:

  • Contact an attorney.  Before you sign an oil or gas lease, contact an attorney and ask them to review it, especially provisions about payment and damages
  • Contact your mortgage lender. If have a mortgage loan, signing an oil or gas lease could violate the terms of your mortgage.  It could also prevent you from being able to refinance your mortgage in the future. 
  • Check out the landman.  Oil or gas leases are often offered by salesmen called landmen who are required to register with the NC Department of Environment and Natural Resources.  Check out a landman with DENR online or by calling 919-707-8605. 
  • Research the company.  If you lease your land to a company for oil and gas exploration, you’ll be dealing with that company for years to come.  Before you sign a lease, check with the North Carolina Secretary of State’s office to find out if the company is registered to do business in North Carolina. 
  • Get all promises in writing, and get a copy of your lease.  Make sure any promises or conditions you discuss are in writing and are part of the lease.  Also, be sure to get a copy of your lease. 
  • Get a copy of your legal protections.  At the time landmen or companies offer you an oil or gas lease, they are required to give you a copy of the North Carolina law that protects you.  Ask your lawyer to be sure your lease complies with North Carolina law or provides greater protections.
  • Don’t be pressured to sign. Take your time before you a sign an oil or gas lease, and don’t let high-pressure sales tactics force you to make a decision before you’re ready. 
  • Know your right to cancel.  If you sign, you will have seven days to cancel it under North Carolina law without any penalty.  To cancel your lease, send the company a written notice that you want to cancel.

For more tips plus a detailed summary of the protections available to landowners under North Carolina law, visit ncdoj.gov/fracking.

“Leasing your property for oil and gas exploration comes with risks, and that’s why it’s so important that you know your rights and do your homework before you sign a lease,” Cooper said.  “If you have problems or questions, our office can help.”

To file a consumer complaint or talk to a consumer protection expert, call 1-877-5-NO-SCAM.  Consumers can also file complaints online at www.ncdoj.gov

  Media Contact:  Noelle Talley (919) 716-6413